Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. 

Cost                                                                         $10,080,000 

Accumulated depreciation to date                    1,120,000 

    Expected future net cash flows                      7,840,000                  

Fair value                                                               5,376,000  

Assume that Cullumber will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 5 years.

a)Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017.

b)Prepare the journal entry to record depreciation expense for 2018.

c)The fair value of the equipment at December 31, 2018, is $5,712,000. Prepare the journal entry (if any) necessary to record this increase in fair value.

 

Answer rating: 100% (QA)

Solution working note1 calculation of new impairment of assets Cost 10080000 LessAccu... View the full answer